Sally Beauty Supply 2013 Annual Report Download - page 35

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Our comparable store sales and quarterly financial performance may fluctuate for a variety of reasons.
Our comparable store sales, which we refer to as same store sales, and quarterly results of operations have
fluctuated in the past and we expect them to continue to fluctuate in the future. A variety of factors affect
our comparable store sales and quarterly financial performance, including:
• changes in our merchandising strategy or mix;
• the performance of our new stores;
• our ability to increase sales and meet forecasted levels of profitability at our existing stores;
• the effectiveness of our inventory management;
• the timing and concentration of new store openings, including additional human resource
requirements and related pre-opening and other start-up costs;
• levels of pre-opening expenses associated with new stores;
• the effect of our integration of acquired businesses and stores over time;
• the varying cost and profitability of new stores opened in the U.S. and in foreign countries;
• a portion of a typical new store’s sales (or sales we make over the internet channel) coming from
customers who previously shopped at other existing stores;
• expenditures on our distribution system;
• the timing and effectiveness of our marketing activities, particularly our ability to drive new retail
traffic into our stores and our Sally Beauty Club and ProCard promotions;
• seasonal fluctuations due to weather conditions;
• our internet channels diverting sales from our stores;
• actions by our existing or new competitors;
• fluctuations over time in the cost to us of products we sell; and
• worldwide economic conditions and, in particular, the retail sales environment in the U.S.
Accordingly, our results for any one fiscal quarter are not necessarily indicative of the results to be
expected for any other quarter, and comparable store sales for any particular future period may not
continue to increase at the same rates as we have recently experienced and may even decrease, which could
have a material adverse effect on our business, financial condition and results of operations.
We depend upon manufacturers who may be unable to provide products of adequate quality or who may be unwilling
to continue to supply products to us.
We do not manufacture any products we sell, and instead purchase our products from recognized brand
manufacturers and private label fillers. We depend on a limited number of manufacturers for a significant
percentage of the products we sell. During the fiscal year 2013, our five largest suppliers were Procter &
Gamble Co., or P&G, the Professional Products Division of L’Oreal USA—S.D., Inc., or L’Oreal, Conair
Corporation, John Paul Mitchell Systems and Shiseido Cosmetics (America) Limited and accounted for
approximately 40% of our consolidated merchandise purchases. In addition, one of those suppliers,
L’Oreal, represented approximately 12% of BSG’s merchandise purchases during the fiscal year 2013. BSG
recently reached agreement with L’Oreal to extend the right of BSG to distribute Matrix↧ and certain
other L’Oreal products in BSG East and BSG West, subject to certain conditions, through December 2015.
Since we purchase products from many manufacturers and fillers under at-will contracts and contracts
which can be terminated without cause upon 90 days’ notice or less, or which expire without express rights
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